November 2020 B-20-044

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Callaghan Innovation Brief.Briefing to the Incoming Minister Seizing a once-in-a-lifetime opportunity

Shared vision for New Zealand Invitation to all of government Convening the leadership Join us on the innovation journey

Exploring a post-pandemic workforce All this plus Let’s science the s#*& out of it Business as usual R&D Tax Incentive A great example of pan-agency collaboration ... but better Gracefield Innovation Quarter Tangible demonstration of post-COVID-19 collaboration The only real option is to innovate

“We are rich in water and energy resources, we have a great education system, world-class science and engineering, a vibrant artistic and creative sector, quality urban environments and a civil society. When we combine all this with our unique landscapes and our pristine mountains and seas, we have the chance to be the place where talent wants to live. What is needed is a national strategy and the resolve to move consciously towards its vision.” Let’s innovate

Sir Paul Callaghan to build back better Callaghan Innovation The back Briefing to the About us

Incoming Minister 18 How we engage with you

19 What we do

20 Our own innovation journey

21 Our people Contents 23 How we’re funded 24 Performance metrics

26 The Board and Executive Leadership Team The front

27 Appendices A message from Vic Crone, our Chief Executive 1. What we deliver to the innovation ecosystem 4 – We’re up for becoming New Zealand’s innovating agency. 2. How we are strengthening our critical foundations FEATURE: Opportunity is banging on the door.

7 We need to answer it! – In every crisis lies great opportunity, and New Zealand has the chance to maximise it. This document is intended to be read as part of a set of three Plus business as usual… but better – publications (Annual. Brief. Beyond.). 14 How wellbeing and trust can help us achieve The first was Callaghan Innovation’s 2020 Annual Report our goals. (callaghaninnovation.govt.nz). This Briefing to the Incoming Minister is to be read second. The final publication is intended to be a website that will launch in the new year. A message from Pete Hodgson, our Chair – 16 What is needed is strategy and resolve. We’d Cover image: At 5:42am EDT on Friday, like to play our part in this work. 29 June 2018, SpaceX’s Dragon spacecraft lifts off on a Falcon 9 rocket from Space Launch Complex 40 at Cape Canaveral Air Force Station in Florida, carrying more than 2,600 kilograms of research, equipment, To move quickly through sections of this cargo and supplies that will support dozens Navigation: of scientific investigations aboard the briefing document, select the tab below. International Space Station. Image credit: SpaceX

3 Kia ora from Vic

I am proud to be leading an organisation that is fearlessly focused on the future

New Zealand has an opportunity to At Callaghan Innovation, we work with around 3,000 diversify its economy, prepare for the New Zealand entrepreneurs and innovative businesses. They – and others like them – represent an opportunity future, and thrive in a pandemic-affected to reshape our economy for a future that can go global economy. far beyond a rebuild of existing industries. Industry leaders are telling us they need a shared vision for recovery now, more than ever before. At the same Our country’s relative success in managing COVID-19 time, Callaghan Innovation has reviewed the recovery presents a once-in-a-lifetime opportunity to thinking presented by thought leaders across New innovate. With focused intervention, New Zealand can Zealand’s industry, science and business sectors. There diversify our economy, support emerging high-value is a surprising level of commonality in their aspirations sectors and position businesses for global growth. At for our future. Callaghan Innovation we believe a collective, long- term vision is needed to galvanise the nation towards a We can’t know the future, but we can prepare for shared recovery and a future we can shape together. it. Innovation is all about starting with a hypothesis, testing it and going back to the drawing board if things In 2011, Sir Paul Callaghan said: “What is needed is a don’t work. At Callaghan Innovation we have been national strategy and the resolve to move consciously ‘innovating within’ since I took over three years ago, towards its vision.” I believe Callaghan Innovation and that first-hand experience is what we now offer was conceived to be that resolve. The COVID-19 you. I believe our success as a nation in a COVID-19- pandemic (and New Zealand’s response) has helped affected world will require all government agencies to me understand more acutely that achieving Sir Paul’s – strive together towards true transformation. or indeed any – vision requires innovation and resolve from everyone, working together. Callaghan Innovation is uniquely trusted to become the agency empowered to convene the leadership for We have lived through years of digital disruption in a this transformation. For the past two years, Callaghan matter of months. It seems as if everything has been Innovation has participated in Colmar Brunton’s Public flipped upside down (and inside out) within a very short Sector Reputation Index, and has been recognised as space of time. Before COVID-19, New Zealand was in the top five most trusted 50 government agencies. New Zealand’s Innovation facing significant challenges in the coming decades In 2020 we ranked second only to Fire and Emergency from technology, demographic and environmental New Zealand in the leadership pillar, moving up from Agency is ready to step up and changes. These challenges were accelerated further third in 2019.  by the global pandemic, and the next two decades will also become this country’s only bring more challenges as the exponential change in our world continues to play out. innovating agency.

CEO’s message 4 The past is gone, and we’re not looking back. The International Day of Women and Girls New Zealand’s productivity growth hasn’t always in Science, celebrated in February 2020, was about encouraging a new generation kept up with those of other countries in the OECD. of women and girl scientists to tackle major Recently, Callaghan Innovation’s in-house research challenges of our time. team updated the data Sir Paul Callaghan used Farzana Masouleh (pictured) is one of the as evidence in his 2011 presentation: Sustainable bright minds working at our Gracefield economic growth for New Zealand: An optimistic Innovation Quarter (GIQ). In partnership with myth-busting approach. New Zealand still has a long Hutt Science, Callaghan Innovation hosted 45 Year 11-13 female students at our GIQ site in way to go on many measures. Lower Hutt. The young women delved into the However, New Zealand has the resources, talent exciting worlds of hi-tech sensors, 3D printing and precision measurement. Meanwhile, at our and opportunity for a successful and innovative Auckland location, Year 9-13 students covered future. We need to act now – and take advantage of everything from engineering and big data to the opportunities that the current COVID-19 crisis bioengineering and augmented reality. presents. Together, we must refresh the ways in which we are working so that we can address the complex challenges we face.

We look forward to working with you to achieve your objectives and drive towards a better future for New Zealand.

Vic Crone Callaghan Innovation CEO

Science, technology, engineering and math (STEM) jobs are increasingly important for New Zealand’s future. At Callaghan Innovation, we are seeing serious demand for STEM skills from the businesses with which we work, especially frontier industries like robotics, food science, aeronautics, big data, smart transport, health technology, artificial intelligence (AI) and sustainable energy. These skills will become even more in demand as we move into our technology-driven future.

Callaghan Innovation is the official innovation agency of the New Zealand Government. It’s also the only Crown entity to have been named after a single individual, local scientist Sir Paul Callaghan. Want to understand why, and be inspired like we are? Watch Sir Paul’s 20-minute presentation that set us all on this journey: (bit.ly/optimisticmythbusting).

CEO’s message 5 Watch our vision story

Click here or visit bit.ly/LookToUs to watch the video (3:37)

CEO’s message 6 Right now, our opportunity to innovate is banging on the door Opportunity – and we need to answer it!

Even pre-COVID-19, New Zealand was a country that needed innovation. Historically, our economy’s long-term challenges have included low productivity and wages, skill knocks shortages, limited domestic capital markets, a lack of diversification and under-investment in infrastructure.1 New Zealand has also had low rates of technology transfer and weak investment in knowledge-based capital, reflected in our low investment in business Research and Development (R&D) expenditure relative to GDP.2 We have lagged behind our OECD peers in both labour productivity and productivity growth, translating to a lower GDP per capita.3 Pre-COVID-19 Callaghan Innovation had already seen opportunities to use technology changes in the coming decades to finally shift some of these measures. To prepare for the future, we have been focused on economic diversification to digital industries (as well as science and engineering technical support across agri-tech, med-tech, ICT advanced manufacturing, bio-tech and clean-tech). Our efforts have complemented the Government’s wider Industry Transformation Plans to address how our economy’s focus will be moved from volume-based commodities to high-value export industries. 

1. Economic Plan for a Productive, Sustainable and Inclusive Economy (2019). New Zealand Government. 2. Achieving New Zealand’s Productivity Potential (2016). New Zealand Productivity Commission. 3. Productivity by the Numbers: 2019 (2019). New Zealand Productivity Commission.

Feature 7 World-wide, the scale and Numbers in 2040 pace of technological change has been unprecedented, The leap Two decades from now or 20 minutes from now? How fast is the world around us moving? Consider and the impacts are amplified how e-commerce has replaced physical channels in by interactions with other just three months. mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/ socio-economic factors such five-fifty-the-quickening as shifting demographics, globalisation and the US e-commerce penetration, % 50% of all 65% of people live cars sold are in urban areas transition to a sustainable, ots autonomous 9.15B world population zero-carbon economy. (7.63B in 2018)

And then COVID-19 happened India is the AI1 is

Our customers told us that the top five impacts of COVID-19, world’s everywhere which revealed some consistent challenges across the second-largest innovation ecosystem, such as revenue generation, supply economy chains, keeping talent and funding for R&D.

1. 50 percent reported delays in their ability to launch products and services. 2. Others were affected by the closure of markets (49 percent) – national (28%) and/or international (30 percent). 3. 33 percent said they were affected by closures of +1.62°C average 54% of cars sold supply chains – national (24 percent) and/or international temperature rise are electric (12 percent). 4. 20 percent report having to let staff go or reduce their pay. Source: Bank of America; Forrester Analytics; ShawSpring Research; 1. esa.un.org/unpd/wup/ 5. 19 percent said investor funding was affected.  US Department of Commerce; McKinsey analysis iom.int/news/iom-migration-research-series-no-31- migration-and-climate-change

Feature 8 Before COVID-19, urbanisation, accelerating New Zealand’s innovating agency technological change, an aging population and greater Numbers in 2040 global connections were already reshaping the world as Callaghan Innovation understands now that we must we knew it. McKinsey estimates1 that, compared with practise what we preach. We know our customers the Industrial Revolution, change is happening 10 times are most successful when they are innovating Two decades from now or faster and at 300 times the scale, with roughly 3,000 simultaneously on their products, operations and times the impact. business models. We are doing the same. 20 minutes from now? The COVID-19 pandemic has only intensified these Many organisations, both private and government, run trends – which have been termed “the quickening” and single programmes on things like transforming back- “the great acceleration”. McKinsey research2 found that office IT and enabling more interactions via digital e-commerce penetration in the United States doubled channels. Our approach is to transform our services in just three months, having previously taken 10 years to through a new business model and the way we operate double. Microsoft Chief Executive Satya Nadella said through a new operating model, and upgrade physical recently that the company had seen two years’ worth of assets (infrastructure and digital) to enhance our digital transformation in only two months. services and the way we operate. AR/VR3 is the China is the ubiquitous world’s largest This acceleration comes with comes a unique For the past 24 months, Callaghan Innovation has been opportunity. We know from previous recessions that undergoing its own transformation, by adopting three viewing platform economy technology and automation rise to the forefront during new ways of working. crises to create new market opportunities and business 1. The Treasury required Callaghan Innovation to efficiencies. deploy the Managing Successful Programmes (MSP) framework for our Gracefield Innovation Quarter (GIQ) programme, which aims to fulfil our duty of Beyond COVID-19 care to staff and tenants at our Lower Hutt site. We have voluntarily opted to use MSP across all our A more productive, sustainable and inclusive internal transformation programmes. Along with economy can be delivered by supporting world- this, we have established an Enterprise Programme 170B connected 47% of jobs have leading environmental, social, cultural and economic Management Office and extended its scope from devices been automated opportunities. It is critical that we help businesses managing just our programmes to managing our (Up from 40B in 2018) to start, maintain or even accelerate their R&D and whole portfolio of investments, including core innovation in a COVID-19-impacted world. business to support the Government’s objectives. Innovation and R&D are the keys to unlocking We are now able to pivot this portfolio quickly potential. Callaghan Innovation’s 2018 report, Growing depending on Government priorities. During the the Pie, estimated that New Zealand’s nine ‘unicorns’ Alert Level 4 COVID-19 response, we pivoted our – businesses worth more than $1 billion each – had strategy and were able to re-organise our work created more than $34 billion in value between them. quickly to support the Government’s response and However, their total value to New Zealand was much our customers’ immediate needs.  greater than that because of their contributions to other 180m people are US$160 per barrel of start-ups, and to philanthropic causes. Growing the Pie showed the value that entrepreneurs drive into our on the move due crude oil economy through creating ideas, scaling those ideas to climate change (Up from US$70 in 2018) globally and then exiting, something that creates a whole new cycle of start-ups, job creation and fresh capital investment. 1. mckinsey.com/business-functions/strategy-and-corporate-finance/our- 3. Augmented reality/ quantumrun.com/future-timeline/2040 insights/the-four-global-forces-breaking-all-the-trends virtual reality pwc.com/gx/en/world-2050/assets/ 2. mckinsey.com/business-functions/strategy-and-corporate-finance/our- pwc-world-in-2050-summary-report- insights/five-fifty-the-quickening feb-2017.pdf

Feature 9 2. MSP has been proven a success, but we believe it does not meet all our requirements. Callaghan Life in 2040 Innovation has chosen to blend MSP with the Regenerative Approach, which has been described by Māori participants as “the closest thing to Te Ao COVID-19 has accelerated our • More internal and international climate refugees are Māori, the Māori worldview that isn’t it”. Threads journey towards what our future will requesting assistance – up to 1.7 million people displaced of wellbeing, quality of life and kaitiakitanga are in the Pacific region alone. New Zealand may be seen as a clearly visible in this way of thinking. look like. We need to prepare for refugee ‘haven’, putting pressure on aging infrastructure. The Regenerative Approach is rapidly gaining that change now. • Limited health care resources and staff will shift attention around the world. It has been selected the focus to self care, with technology supporting as the change framework the Commonwealth of The world in 2040 will look very different from that independent living for the elderly and pre-emptive Nations will use to try to reverse climate change of today. The fourth Industrial Revolution will have diagnosis. Patients will have greater control, using AI to through its Common Earth initiative. completed its cycle. support self-diagnosis of health issues and treatment options. 3D-printed, functional organs and tissue have The next two decades will be full of challenges as the 3. In the first half of 2021, Callaghan Innovation been approved for human transplant by the FDA. New exponential change in our world continues to play out. will bring in agile practices and structures using Zealand’s historically low organ donation rate is no longer MSP and the Regenerative Approach. This will • The New Zealand population aged over 65 a health consideration. be a sustainable way to achieve similar outcomes has doubled, and life expectancy has increased • to crisis management, where cross-disciplinary Traditional competition will change. The complexity by five years, putting extreme stress on our of change will require partnership-driven innovation: teams operate at pace against missions aligned to superannuation and health systems. Yet our Government objectives. NZ Inc will have to move from national competition to working-age population (15-64) has only increased collaborating for global growth with shared risks/rewards. by 10 percent. Half the workforce will be Māori, Going agile will increase our impact by freeing up • Our food choices will be influenced by ethical and Pacifica and Asian. our capability from a base of traditional silos into environmental values. Technology innovation in multi-disciplinary and multi-organisational teams • India and China will be home to half of all alternative proteins and milk products, ultimately at a to tackle our most pressing priorities. We can middle-class consumers. We will have to adapt price point on par with traditional products and affecting also leverage the significant expertise in networks our products and capabilities to meet these the value of our animal-based agricultural economy. such as KEA and the Edmund Hillary Fellowship, higher-value consumer needs, which are different Alternative proteins will become the first choice for the and bring that value to our customers and partners from those of our current primarily western trading majority of consumers globally. across the innovation ecosystem.  partners. These consumers are increasingly • Of the top 30 economic entities in the world, more environmentally responsible. than 20 will be corporations, not countries. Global • The notion of ‘the job’ is a distant memory. technology and commerce will demand a rethink People build portfolio careers through of national and international structures, norms and entrepreneurship, start-ups, freelancing and behaviours. independent contracting. New technologies completely change both where and how we work; new types of roles (e.g. artificial-organ farmers) emerge. A new generation is attracted to social enterprise, which offers a sense of purpose and value. New Zealand will need a highly flexible, adaptive education system and workforce with new regulatory mechanisms to support them.

Feature 10 During the initial COVID-19 response, central government was able to move swiftly and decisively using crisis management. In some instances we saw walls being broken down across agencies that we’d not seen before, due to the imperative to act. However, crisis management is not a sustainable way to operate and will burn out our human capital. Callaghan Innovation is still a work in progress. But work in progress is the new normal for all of government as we continue to respond to pandemic- related developments. To date we’ve learned some useful things, and we’d like to share them with our colleagues in other agencies. Likewise, we believe we could learn a great deal from them. COVID-19 has changed and blurred – and will continue to change and blur – the nature of work, technology, innovation, collaboration and leadership, and the nature of the organisations that have traditionally been responsible for each of these silos.

“We have to energise people and motivate people and get them thinking in a different way. The most important thing is to get a national conversation going where there’s an awareness building in the country about what we’re capable of and some excitement around what we can do… We either stake our claim in the global economy, play to our strengths, develop new ones, prosper and grow, or we face a very poor future indeed.”

Sir Paul Callaghan, 2010

Feature 11 What we want to focus on 1. 2. 3. 4. R&D Tax Incentive Post COVID-19 workforce Gracefield Innovation Quarter Invitation to all of government

The RDTI was launched in May 2019 as The world of work is being transformed The Gracefield Innovation Quarter As New Zealand’s innovation agency, an interagency project by MBIE, Inland by technological advances such as AI, (GIQ) in Lower Hutt is an innovation hub Callaghan Innovation aims to act as an Revenue and Callaghan Innovation. robotics, autonomous everything and big with specialist premises and facilities, exemplar to the rest of government on how The RDTI supports businesses doing data analytics. Research published earlier including workshops, pilot plants, labs and a modern state-sector agency operates ground-breaking R&D in areas such as AI, this year indicated that transitioning our equipment. Many businesses work out of in the world of technology and innovation blockchain, genetics, mechanical/structural workforces due to automation will deliver GIQ, from small start-ups to R&D teams proliferation thrown upon us by the Fourth engineering and agri-tech. to 14 of the United Nations’ 17 Sustainable from major international companies. Industrial Revolution and accelerated by Development Goals. COVID-19. In the first year, the focus was to raise Our vision for GIQ is to make it a awareness of the new tax credit. Callaghan Living and working in a more sustainable vibrant, supportive and connected We have either embedded or are Innovation led promotional activities way is more than just good business. It can innovation community. This type of work embedding a range of practices to support directing users to the purpose-built affect everything from socioeconomics to is a demonstration of post-COVID-19 a modern state-sector agency to lead and RDTI Hub website, and 1,150 people are diversity and climate issues. collaboration, enabling all kinds of R&D respond in the more volatile and uncertain subscribed to regular updates. Engagement businesses to learn from one another. environment we are all facing. Using a mission-based innovation activities included meetings and events philosophy, Callaghan Innovation proposes To move towards this future state, we are Our invitation to the rest of government is with over 7,000 people. to discuss with you leading a pilot mission running a strategic programme of work for other agencies to come along with us in This year, the focus is on deepening on the future workforce needed to support in collaboration with partners across the our innovation journey. engagement with businesses that have highly innovative economy. We would innovation ecosystem, academia, central COVID-19 has provided us with an shown interest in applying, including those convene all relevant government agencies and local government, iwi and the local opportunity to reset ways of thinking and previously receiving Growth Grants. All and private sector players and identify what community. become a more adaptive, flexible and fast- current Growth Grant contracts will end we can achieve in a defined period that The site currently needs upgrading, and moving organisation. by 31 March, and these customers need to supports the Government’s policy in the there is a significant management and understand the different eligibility criteria future of work and innovation space. We will lift our partnerships with other governance focus placed on HSE issues as and process for moving to the RDTI, government agencies and departments to We propose using innovative practices a result of a legacy of lack of investment. which may mean they are not eligible, or deliver government policy and our current to co-create and develop market-ready In May 2019 the Government invested receive less funding. This impact will be programmes more effectively. protoypes to progress this goal. Callaghan more than $110 million in addressing many felt primarily by digital businesses, who in Innovation is well placed to lead this of these issues demanding immediate some cases will lose significant support. short-term, multi-agency pilot mission attention, including structural upgrades, Our team will continue to capture customer on the future of work, given our focus on asbestos contamination remediation and feedback and provide this to MBIE. technology, research and innovation, and maintenance. From an operational perspective, Callaghan our close relationships with New Zealand’s This work is due to be completed by 2023 Innovation and Inland Revenue are most future-focused private companies. and will provide the foundation for GIQ’s continuing to refine the application and future development as a world-class hub for assessment process to improve the R&D innovation. customer experience.

Feature 12 Our priorities Key areas

The trends are clear. Our role now is to Economic development Small business Environment, climate shape the future in partnership with business change and primary The innovation ecosystem needs effective, The vast majority of New Zealand’s and government. co-ordinated support from Government businesses are small businesses. There are industries to thrive. Innovation and R&D are the keys around 530,000 small businesses – defined Environmental innovation is critical The immediate areas of focus we would like to discuss with to unlocking potential. A more productive, as having fewer than 20 employees – in to delivering improved environmental you to ensure we are supporting the innovation ecosystem sustainable and inclusive economy can be New Zealand, representing 97 percent of outcomes for New Zealand. and your priorities include: delivered through our support of world- all firms. leading environmental, social, cultural and Callaghan Innovation works closely with 1. The impact of COVID-19 on business enterprise R&D economic opportunities. They account for 28 percent of employment enviro-tech companies and is well placed (BERD) targets and stimulating R&D investment: and contribute over a quarter of New to deliver initiatives aimed at growing the Innovation capability and new technologies Zealand’s GDP. –– enviro-tech sector in New Zealand. Next steps in operationalising and embedding the are vital to addressing the fundamental R&D Tax Incentive challenges of productivity in New Zealand Approximately 50% of the $50 billion New Zealand has a real strength in terms of –– Supporting R&D in the medium term given projected and building a new economy in a COVID- Māori Economy is made up of SME’s. environmental entrepreneurship. Research shows that Māori companies have delays to the 2 percent increase in BERD target 19-affected world. higher rates of innovation and R&D than Tikanga Māori, the spiritual values of –– The grant appropriation and the evolution of the R&D There is a huge opportunity for Callaghan NZ businesses as a whole, but are under reciprocity and balance of people, grant services Innovation to be more ambitious in our accessing government support. There are environment, natural resources not only definition of ‘organisational transformation’, opportunities to have greater impact and help us be better New Zealanders but bring 2. Building innovation capability in New Zealand to address e.g. through the Digital Technology Industry ensure these businesses are aware of and global competitive advantage. Māori play productivity issues, including supporting the role of Transformation Plan. can access our support. a significant role in our primary industries, innovation and technology in the wake of COVID-19 collectively owning large proportions of In order to grow New Zealand’s pipeline COVID-19 has forced many of these to these assets. of entrepreneurs and potential unicorns adopt new technologies and innovate to 3. Running a proposed pilot mission on the future work- we must support these organisations more make their businesses more efficient so they Callaghan Innovation can help force to support post COVID-19 innovation economy strongly in areas such as market fit and can survive and thrive. organisations tap in to this capability and access to skills to globally scale and capital. create opportunities for partnerships If we are to fundamentally shift our economy, focused on environmental innovation. 4. The evolution of our services in a world of volatility, The government must approach this as an then a more ambitious culture of capability uncertainty, complexity and ambiguity: ecosystem of coordinated support that it is building and an innovative mindset are The redevelopment of GIQ presents a –– Policy development and implementation for the health currently not doing. needed throughout our small businesses. huge opportunity to test environmental of the innovation ecosystem across multiple policy innovations and create a hub for Our focus on unlocking the R&D potential of Callaghan Innovation works with small environmental innovation. teams and delivery agencies the Māori Economy to help achieve cultural, businesses that are innovative or R&D- –– The Gracefield Innovation Quarter strategic environmental and economic aspirations, focused. The number of these firms needs programme contributes to the government’s vision of a to grow for the benefit of our entire country. productive, sustainable and inclusive future –– Callaghan Innovation’s transformation to a modern for Aotearoa New Zealand. Callaghan Innovation is well placed to innovation agency that is citizen centred, inclusive, deliver initiatives for the small business collaborative and uses technology to scale its impact As an agency that sits across the Research, portfolio that are aimed at increasing firm Science and Innovation and Economic growth and productivity. –– Using agile and trying new ways of doing things Developmentportfolios, Callaghan Innovation is uniquely placed to deliver We do this already through the Regional 5. Budget bids Business Partner Network but we believe mutually reinforcing initiatives. there are further opportunities to scale –– Further funding to support Māori sector, Agritech, government intervention in this sector of HealthTech and Food Innovation Network the economy. 6. Appointment of Board members to replace departing members.

Feature 13 Who we are. 10 fast facts 6. We aim to accelerate the growth, scale, intensity Plus business and success of innovation in New Zealand, to 1. Callaghan Innovation is a government agency build business investment in R&D and support as usual… supporting hi-tech businesses in New Zealand. export growth. 2. We activate innovation and help businesses grow 7. We partner with ambitious businesses of all sizes, faster for a better New Zealand. providing a range of innovation and R&D services to suit each stage of growth. We will continue business as usual 3. We’re named after the late Sir Paul Callaghan, with our wide range of programmes who championed the role science could play in 8. We’re a mix of 458 researchers, engineers, making New Zealand an economic success. scientists, technologists, designers, that support innovation and R&D. entrepreneurs, advisors and administrators 4. Callaghan Innovation was formed following delivering self-help and on-demand services and the recommendation from the 2011 Powering tailored programmes. Innovation report, which looked at how to boost the growth of businesses in the manufacturing 9. We work closely with government partners, and services sectors. Crown Research Institutes and other organisations that help increase business 5. Callaghan Innovation is a catalyst for the investment in R&D and innovation. commercialisation of science, engineering, technology and design. 10. Callaghan Innovation has four urban offices, and a partnership network spread across 12 regions in New Zealand.

The Gracefield Innovation Quarter Programme is focused on delivering a vibrant, supportive and connected innovation community. “If New Zealand is to grow its economy more rapidly it must overcome geography to build nationwide communities of innovators, entrepreneurs and businesses.”

Sir Paul Callaghan

There is more detail on all of our business as usual in Appendix One.

BAU but better 14 … but better We’ve earned their trust

It’s about more than just Our country’s unique commitment to the relation- “Trust is the glue of life. Our government is trusted ship between the Government and the indigenous At a time when data from the Gallup commercialisation now Māori people, as defined by Te Tiriti o Waitangi, It’s the most essential World Poll suggests that trust in gives us a strong foundation for shared principles of ingredient in effective public institutions has been going By applying innovation theory and practices as partnership, participation and protection. we work and grow as a country, we will more communication. down recently in OECD countries, a quickly solve the critical issues our society faces That relationship brings with it a greater recent Colmar Brunton poll shows – poverty, inequality and climate change. understanding of the importance of cooperation It’s the foundational 88 percent of New Zealanders trust between people and their places. their government to make the right Treasury Living Standards Framework principle that holds all decisions about COVID-19 (well The Treasury’s Living Standards Framework reflects “We are approaching the relationships.” above the G7 average of 59 percent), our Government’s commitment to thinking about and 83 percent trust it to deal what matters for New Zealanders’ wellbeing, now fastest, deepest, most – Stephen Covey successfully with national problems. and into the future. consequential technological Callaghan Innovation is trusted too It includes 12 domains of current wellbeing disruption in history.” New Zealand is trusted outcomes, and four capital stocks that organise Colmar Bruton’s Public Sector New Zealand is rated in international indicators of sustainable intergenerational This was Fast Company’s headline on 5 October 2020. Reputation Index 2020 named surveys as one of the world’s most wellbeing: Natural, Social, Human and Financial/ Callaghan Innovation the fifth most peaceful and least corrupt countries. Physical. The story stated what we at Callaghan Innovation trusted government organisation. also know: that in the next 10 years, key The 2017 Global Peace Index, which We were the second-highest-scoring It will soon be mandatory for all government technologies will converge to completely disrupt compared 162 countries for the risk of government organisation agencies to report on KPIs based on all four the five foundational sectors – information, energy, personal violence, rated New Zealand for leadership. Leadership was capitals rather than just the last. food, transportation and materials – that underpin as the world’s second safest country measured as: At Callaghan Innovation we can be ‘inspired’ by our global economy. just after Iceland. • Is a forward-looking organisation Sir Paul Callaghan’s vision or wait to be ‘required’ The authors predict – as we do – the “deepest, Transparency International’s 2017 • by law. New Zealand already has a foundation for Contributes to economic growth most consequential technological disruption in Corruption Perceptions Index ranked partnership, participation and protection. • Is easy to deal with in a digital us the least corrupt country in the history and with it, a moment civilization has never environment encountered before”. world, equal with Denmark. The wellbeing approach • Is a successful and well-run New Zealand is also the second safest With this disruption comes a unique opportunity organisation The wellbeing approach of the Government for New Zealand to innovate and deliver new COVID-19 country, after Germany, is grounded on the idea that it is imperative to according to a Forbes report released solutions to society that will improve living As a trusted organisation, Callaghan consider the long-term impacts of policies on the in September. standards for all. Innovation is well placed to convene quality of people’s lives, and that, alone, short-term The study assessed 250 countries output measures will not work. Combining innovation and technology with the leadership of entrepreneurs purpose and profit on the efficiency of their quarantine and government that will bring New The approach has given New Zealand momentum systems, health readiness and manage- Callaghan Innovation was set up to focus on Zealand’s brilliant minds together to – which has yet to be seen anywhere else in ment and detection of the virus. solve the big challenges ahead. the world – towards the adoption of a truly economic businesses but, in less than a decade, we are now seeing the rise of social entrepreneurs. Forbes first carried out the study in intergenerational world-view focused on June and named Switzerland as the integrating cultural, social, environmental and The new thinkers are combining innovation and safest country, with New Zealand at economic wellbeing outcomes. technology with purpose and profit to provide new number nine. ways of solving our social problems.

BAU but better 15 A message from Pete

“Our people work for an Sir Paul also said “What is needed is a national strategy and the resolve to move consciously towards its vision”. organisation, but they believe We would welcome the opportunity to discuss with in a vision.” you the work going on to create this national strategy and the role Callaghan Innovation could play in this.

The world has fundamentally changed in the past eight Reputation and trust months. Callaghan Innovation has an opportunity to Callaghan Innovation has been in the top five agencies help bring together the public and private sectors to in the annual Public Sector Reputation Index for the rise to the new challenges we are facing with our vision past two years. of building New Zealand into “the place where talent wants to live”. The globally validated framework used by Colmar Brunton to measure public sector reputation uses four Every organisation needs a light on the hill to focus on. pillars. They are: A vision and a goal that will stretch it. • Trust In the six months from October 2019 to March 2020, • Callaghan Innovation ran a series of almost 50 internal Social responsibility Callaghan Innovation can push the boat out further workshops. Attendees focused on the value of the • Leadership and easier than other agencies because innovation is organisation having a vision. Key findings demonstrated: • Fairness expected of us. Accordingly we can be an exemplar for • modern state agencies. The importance of our having a strong, compelling Trust is rated on how a government agency is vision and purpose, which scored 9.4 (out of 10) perceived to: listen to the public’s point of view; use Vic Crone as Chief Executive, along with her team, has • The strength of attachment to Sir Paul Callaghan’s taxpayer money responsibly; be trustworthy; and be ensured that Callaghan Innovation is successful and vision – of ‘the place where talent wants to live’, relied upon to protect individuals’ personal information. well run, that it is always looking forward, and that it is focusing its energy on preparing the population for which scored an 8 In 2020 Callaghan Innovation scored fifth out of 50 tomorrow’s problems rather than today’s. • The importance that achieving Sir Paul’s vision agencies for trust. should have for Callaghan Innovation, which Leadership is judged by how much survey participants Sir Paul Callaghan dreamed the dream. The board scored 8.1 feel the agency: is forward looking; contributes to backs Vic, her leadership team and the people at Of course, Sir Paul’s vision was for all New Zealand, economic growth; is easy to deal with in a digital Callaghan Innovation – along with everyone across all not just for the organisation named after him. Before environment; is a successful and well-run organisation; of government – to see the dream delivered. endorsing his vision as our own, leadership at both the and prepares New Zealanders for the future challenges board and executive levels had to re-imagine the role that we face as a nation. Callaghan Innovation might have in achieving such a This year Callaghan Innovation gained one place to broad goal. rank second for leadership. Callaghan Innovation has adopted ‘a place where talent We are proud to be rated so highly, and the rankings Pete Hodgson wants to live’ as it’s own vision, for our country as well demonstrate how the organisation’s leadership, Callaghan Innovation Chair as an organisation where talent wants to be. from the Chief Executive down, has made a tangible difference.

Chair’s message 16 “Any expansion in our prosperity has got to come from a way of using our creative capacity, our education system, our innovation, so that we’re getting value out of our knowledge without impacting further on our environment.”

SirCallaghan Paul Callaghan Innovation October 2020 For our interactive microsite, please visit WoolBriefing to Weta: to the incoming minister Transforming New Zealand’s Culture and Economy (2013) beyond2020.nz or scan the code with your smartphone

Chair’s message 17 How we engage with you

In person Reporting

The Chair of the Board and the Chief Executive will We will provide you with regular updates on our meet with you at a frequency of your choosing. These performance. The Entity Performance and Investment meetings provide an opportunity for substantial branch of MBIE will assist you in reviewing and discussions on wider and pressing issues, and have approving them. been held at both monthly and quarterly intervals. Our corporate reporting documents are: Officials from Callaghan Innovation are part of your • Statement of Performance Expectations: a yearly weekly Research, Science and Innovation (RSI) statement of our objectives and performance officials, providing a more regular opportunity for measures for the upcoming financial year. Timing: updates and policy discussions. May, annually • Annual Report: a yearly report reviewing our financial and non-financial performance for the Briefings previous financial year. Timing: August, annually We will provide briefings directly to your office on • Quarterly reports: quarterly updates on our ongoing issues or where you have requested information. These performance against our strategy and indicative are often provided in collaboration with the Ministry of performance against our financial and non-financial Business, Innovation and Employment (MBIE) and other performance measures. Timing: End of the month government partners. following the completion of each quarter Our fortnightly reports provide you with day-to-day • Statement of Intent: a five-yearly document that updates on general progress. sets out our goals and objectives, and our strategic approach to how we will achieve them. Timing: We are in the third year of the current Statement of Intent. It will be refreshed in early 2021 for the new strategic period commencing in July 2021

Note: The Statement of Performance Expectations, the Annual Prime Minister Jacinda Ardern and Minister for Research, Science and Report and, in relevant years, the Statement of Intent, are tabled Innovation Megan Woods visiting Callaghan Innovation’s Gracefield by you in the House in around October each year. Innovation Quarter, 25 May 2020.

About us 18 What we do

Our current five-year strategy helps us to activate We stimulate demand for New Zealand innovation innovation and accelerate commercialisation for and connect New Zealand innovators to, and remove New Zealand. friction from, the innovation ecosystem. We partner with businesses to empower them to innovate. We are in the third year of the strategy, which seeks to address challenges such as fragmentation in the In a world affected by COVID-19, innovation will ecosystem, low rates of commercialisation and low play an important role in our economic recovery. levels of R&D. High-value R&D activity is critical for a fast economic recovery. R&D creates new and innovative export The strategy has five strategic pillars to address these opportunities, while lifting New Zealand’s productivity. issues: Callaghan Innovation is ready to lead this part of • Build the Critical Foundations. We need to have New Zealand’s recovery as we respond together to the strong foundations to support R&D and enable it to ongoing effects of COVID-19. thrive • Show the Future. Showing New Zealand where technology is taking the world, how we must adapt and how innovation drives success • Fuel Demand. Fuelling demand for New Zealand innovation and being a voice for innovators • Empower Innovators. Empowering innovators by partnering with businesses and delivering the right services and funding support at the right time, for the greatest impact SHOW • Connect the Ecosystem. Connecting innovators to THE FUTURE local and global ecosystems and collaborating to A C T I remove friction in the R&D ecosystem V A FUEL NNOV T I A T E DEMAND I O N HOW WE BUILD THE CRITICAL DO IT FOUNDATIONS N E O T I A T R A Our strategy is to show C A C E L E S O C L I New Zealand what the future M M E R C I A EMPOWER looks like and to show how INNOVATORS CONNECT we’ll get there. THE ECOSYSTEM

About us 19 Our own innovation journey 1. 3. Callaghan Innovation is undergoing its own Digital transformation Health and safety Building the internal transformation targeted at rapid step change to address operational deficits The Digital Transformation Programme will improve We are in the process of strengthening our health critical foundations inherited at its establishment. In the next the productivity and quality of our services both and safety culture and processes at Callaghan year we will evolve significantly both our now and in the future. Innovation. The work includes addressing a number of New Zealand’s business model and our operating model. The progress made in FY20 lays a strong foundation of factors including our critical risks, as well as the for the coming years. Callaghan Innovation has hauora (wellbeing) of our people. innovation ecosystem. The key goals of our transformation are: successfully transitioned to Google Workspace, Through this project, and recognition of the creating a modern online working environment wide array of health and safety challenges at the • Increase impact from government enabling and improving collaboration between Gracefield Innovation Quarter (GIQ), we have investment teams within Callaghan Innovation. progressed our health and safety journey but still The Government will not be left • Increase efficiencies in the way we work The system is allowing a more collaborative, have some way to go. untouched by the interactions between data-driven and agile Callaghan Innovation. The We are moving to the next stage of this project to • the Fourth Industrial Revolution and Meet rising customer expectations improvements will enable us to adapt to future the Home Safe Every Day programme, which has other major social, economic and • Scale services and impact of demand, and to incorporate machine learning, three phases: discovery, transition and transform. demographic changes. government organisations business process intelligence and AI. Our discovery phase is well underway. Government organisations can use • Respond to rapid disruption and technology changes to achieve significant uncertainty in the coming decade gains in the performance and efficiency of and better utilise the immense skills, interactions with their citizens. expertise and resources at hand.

Technology and innovation can be utilised We have four key programmes underway for us to: that are enabling us to shift from a • Truly put citizens at the centre of command-and-control system to a flexible, collaborative organisation operating at pace. 2. 4. decision-making Tātai Whetū Gracefield Innovation Quarter • Collaborate deeply and co-create, not just within government but across The Tātai Whetū programme about our culture and GIQ is being upgraded to be a vibrant, supportive industry processes is changing the way we operate. and connected innovation community. • Use technology and automation to scale We want to increase our impact on the innovation For the future GIQ, Callaghan Innovation is running ecosystem and be a world-class government a strategic programme of work in collaboration with their services and impacts agency that is an exemplar of innovation. The partners from across the innovation ecosystem, • to deliver future best practices, Tātai Whetū programme provides a blueprint for academia, central and local government, iwi and the including agile, lean, design thinking, Callaghan Innovation’s future operating model that local community. will be implemented in FY21. and regenerative and wholistic systems design. Tātai Whetū has introduced a new organisational change framework, He rangi hou kei tua, and has refined the vision for the organisation.

Read more about our work in this space in Appendix Two.

About us 20 Our people

Our people are our most important Demographic information Ethnicity We’re committed to resource. Our Callaghan Innovation team being a good employer is made up of 458 people ranging from Asian 4.8% researchers, scientists and engineers Total number of Callaghan Innovation to technologists, investment managers employees (as at 30 June 2020) 458 Māori 1.9% Leadership accountability and culture and innovation advisors – all working New Zealander 26.2% alongside our support teams to empower We continue to invest in our leadership programme to ensure we have the right our customers. Pacific Islands 1.5% Workforce by location leadership skills and capabilities for the UK and Europe 13.1% future, including emotional intelligence and Home Safe Every Day Auckland 95 courageous conversation skills. We are also Unknown 46.3% investing in key leadership talent through Our Home Safe Every Day programme Wellington 336 the provision of in-depth leadership comprises a range of initiatives focused Other 6.2% development experiences. on keeping our people safe and healthy Christchurch 27 at work. Our Risk Framework provides consistent tools, expertise and dedicated Age Recruitment, selection and induction resources to help our people identify and Workforce engagement (figures for part We know that great talent is hard to find. categorise business-related risks. time/full time do not include our six casual Less than 20 years 0.9% employees). We are shifting our sourcing model to To help our people thrive at work, we 20-29 years 8.7% one that exemplifies innovation, engages have established a ‘Hauora’ wellbeing Casual 6 proactively with talent and is more agile. programme focused on five core areas: 30-39 years 26.2% Building an open, diverse and inclusive connecting, physical activity, continual Part time 52 workforce that attracts highly motivated learning, community engagement/giving 40-49 years 28.6% people with a broad range of abilities, and mindfulness. Full time 400 50-59 years 24.0% experience and talent is vital for us. We hope to see more engagement, Fixed term 62 Our refreshed Welcome Programme less presenteeism and absenteeism 60-69 years 9.8% provides a consistent approach to enable and improved productivity – and most Permanent 390 our people to get up to speed quickly and 70-79 years 0.4% importantly, our people will be in a good be effective in their roles. We’re connecting frame of mind to perform at their best and Unknown 1.3% every type of employee – gig workers, get the most out of their careers. Gender interns, summer students and permanent staff – to the Callaghan Innovation Male 288 employee experience through welcome activities, key communication channels, Female 170 seeking feedback via Officevibe and celebrating successes. 

About us 21 Our people (continued) Our people

Employee development, promotion Remuneration, recognition and conditions Safe and healthy environment and exit are our most In the past two years we have worked Our Home Safe Every Day programme We are committed to employee actively to improve the market relativity comprises a range of initiatives focused development through our learning and of salaries paid to our scientists and on keeping our people safe and healthy at development programme. We have an engineers. work. COVID-19 has affected our health, important active secondment programme and safety and environment work, and we have In 2020, with COVID-19 restrictions, we currently 21 people are formally seconded focused our efforts on ensuring employees’ are working with a very limited budget in a range of roles. safety and wellbeing in remote, home and resource. while continuing to address any gender lockdown conditions. As part of our exit process, we talk with inequities. departing employees about how they found Our Hauora programme focuses on the We have established values-based their time with us. We use this information five areas of wellbeing. COVID-19 has reward and recognition programmes and to continue improving the Callaghan also meant an increased investment in A key focus is recognised 16 employees who have also Innovation experience. wellbeing, both physical and emotional, consistently demonstrated Callaghan and our people have reported that this has Innovation values in their work. been extremely useful. our new Home Flexibility and work design We also recognise employees who have We have also increased our focus on health completed 20, 30, 40 and 50 years’ loyal We have well-developed frameworks and and safety, and we have seen an increase in service at Callaghan Innovation (and its processes to support flexibility and work reporting. Safe Every Day design. This helps our people to blend their predecessor organisations). We completed 159 work inspections in work and personal lives effectively. As part We have reviewed the job evaluation FY20. of our COVID-19 response, we embraced framework to ensure relativities and programme. this further and have recently enhanced our fairness in our remuneration structures. Event reporting increased by 21 percent on flexible work policies and frameworks. We last year, with 202 events reported made will implement the changes in 2021. up of: Harassment and bullying prevention COVID-19 has enabled us to speed up • 81 incidents (an 11 percent increase) elements of our Digital Transformation We actively work to ensure we have • 45 near misses (a 2 percent increase – Programme, and our workforce is better a workplace free from bullying and from 44 to 45) connected across key digital platforms than harassment, and our DVFREE framework ever before. supports this. Callaghan Innovation • 76 hazards (a 43 percent increase). received one formal bullying complaint in FY20. The allegation was investigated and no finding of bullying was made.

About us 22 How we’re funded

Callaghan Innovation is funded from seven appropriations within Vote Business, Further detail can be found in Callaghan Innovation’s 2020/21 Statement of Performance Expectations: Science and Innovation, and also raises commercial revenue through its Research and callaghaninnovation.govt.nz/sites/all/files/callaghan-innovation-spe-june-2021.pdf Technical Services, as shown in the table below.

Title Description Total revenue 2020/21 ($m)

Callaghan Innovation Operations: This appropriation, made up of the following three categories, enables us to broker and provide innovation Multi-Category Appropriation services to businesses and deliver programmes that enhance New Zealand’s innovation system.

Building Business Innovation This category is limited to activities that raise awareness of and increase business investment in R&D. 38.5

R&D Services and Facilities for Business This appropriation is limited to providing research and technical expertise and facilities to business and industry. 81.4 and Industry

Business Research and Development This appropriation is limited to the selection of businesses or individuals for either the provision of the Research 8.3 Contract Management Science and Technology output or the award of grants, and to negotiating, managing and monitoring appropriate contracts with these businesses and individuals.

Future-proofing New Zealand’s This appropriation is limited to a package of complementary elements that target different stages of Industry 4.0 1.4 Manufacturing Sector by Driving Industry 4.0 uptake. We intend to increase the uptake of Industry 4.0 and improve the productivity and competitiveness of Uptake and Skills Development New Zealand firms.

Business Research and Development Grants Growth Grants were designed to increase R&D investment by businesses with a strong track records of R&D 138.4 spending in New Zealand.

Targeted Business Research and R&D project grants support greater investment by businesses in R&D, especially those with less established 32.5 Development Funding R&D programmes. We provide up to 40 percent co-funding of R&D costs. Our R&D experience, career and fellowship grants support undergraduate and graduate students to work in commercial R&D environments as interns in New Zealand’s excellent commercial R&D facilities.

Repayable Grants for Start-ups Our Incubator Support Programme accelerates the growth and success of high-value New Zealand start-up 17.9 businesses through a range of services and funding. We intend to support the development and growth of new technology-focused business start-ups.

National Measurement Standards This appropriation is limited to providing specified standards to satisfy the needs for traceable physical 8.8 measurement in New Zealand.

Capital Expenditure This appropriation is limited to capital expenditure to support the development of Callaghan Innovation’s 12.1 strategic infrastructure.

About us 23 Performance metrics

▲ ▲ 0.80% 21k Growth in BERD Growth in number of % of GDP1 companies innovating2 0.75% Baseline (FY19) 20k Baseline (FY17) 1.00% Target (FY23) 21k Target (FY23)

▲ ▲ $2.2b $3.2b 5-600 Growth in value of Growth in value of high-tech Growth in the number of investment deals3 exports4 start-ups5 $1.7b Baseline (FY19) $2.7b Baseline (FY19) 400-600 Baseline (FY19) $1.6b Target (FY23) $3.4b Target (FY23) 800-1,200 Target (FY23)

1 . StatisticsNZ R&D survey. 2. StatisticsNZ business operations survey. 3. EY VC Monitor & PwC Young Companies Finance Index. 4. StatisticsNZ export data. 5. Start Up Genome Report.

About us 24 Our customer demographics

Generally, Callaghan Innovation customers are new small or medium businesses in specialist Industry Customers located areas, with a reliance on key relationships. Agriculture, forestry ▲ Locally only ▼ and fishing 14% 11% Number of employees Number of customers Manufacturing Nationally Average: 33 Median: 17 13% 27%

Professional, scientific Nationally and ▲ 12% 42% 7% 0 and technical services internationally 3% 12% Fewer than 5 9% 1-5 Finance and insurance Internationally only 39% 38% 5-20 10% 8% 5% 6-9 17% 21-50 10-19 13% Information media and Do not currently ▲ 6% 51-100 9% 20-49 telecommunications have any customers 11% 9% 101-500 24% 19% 50-99 Other services 500+ 9% 100+ Suppliers located Transport, postal and ▲ ▼ warehousing 7% Locally only 9% Revenue Tenure Education and training 6% Nationally ▼ Median: 6 years 10% ▲ Arts and 40% 40% 28% 5% 28% recreation services Nationally and ▲ 58% 29% ▲ internationally 32% 32% 19% Construction 20% 20% 24% 17% 3% Internationally only 24% 16% 15% ▼ 8% 16% 16% 9% Health care and 3% 8% 8% social assistance Do not currently have any customers 14% 0% 0% Wholesale trade 2% 0-2 3-5 6-10 11-20 21+ 0 1- 30,000- 100,000- 500,000+ 29,999 99,999 499,999 ▲ ▲ ▲ Years Electricity, gas, water $ 2% % % % and waste services 50 66 77 Administrative and Exporters Importers Any 1% support services international trade Retail trade ▼ 1% Base: Callaghan Innovation users (n=199) Mining 1% ▲ ▼ Significantly higher/lower than Total Innovators

About us 25 The Board and Executive Leadership Team

Board Executive Leadership Team

Esther Livingston, Chief Operations Officer Pete Hodgson, Chair Jennifer Kerr, Deputy Chair Vic Crone, Chief Executive – Internal Partnering

Rosalie Nelson, General Manager Elena Trout Matanuku Mahuika Jen Cherrington, Chief Digital Officer – Strategy, Impact and Insights

Paul Linton, General Manager – Research and Stefan Korn, General Manager – Market Shaun Hendy Angela Bull Technical Services, and Commercial Businesses Engagement and Experience, and Sectors

About us 26 Appendix One: What we deliver to support the innovation ecosystem

We deliver or administer a variety of initiatives on AddLab provides both an R&D service, developing The Accelerator programme has the same broad Science for Technological Innovation is a behalf of both the RSI and Economic Development concepts and early prototypes with businesses, and objectives as the incubator programmes, but National Science Challenge focused on enhancing portfolios to provide tangible benefits to the a consulting service, helping to assess how additive focuses on rapid and intensive product development New Zealand’s capacity to use physical sciences innovation ecosystem. Each of these fits within the manufacturing may contribute to their businesses to establish investment-ready start-ups, and often and engineering for economic growth. Hosted strategic themes of showing the future, fuelling and connecting them with commercial providers complements the services offered by founder and by Callaghan Innovation, it aims to develop demand, connecting the ecosystem or empowering and partners. technology incubators. The programme comprises world-leading science and technology relevant to innovators. programmed events and intensive mentoring to New Zealand, with a focus on building enduring drive rapid formations of early-stage start-ups. partnerships between researchers, businesses Fuel demand The programme concludes with a final pitch to and Māori organisations. In the 10-year life of Show the future an audience of potential investors at which seed, the challenge, approximately $110 million will be The Technology Incubator programme helps de- angel or venture capital funding might be attracted. invested in 70 leading-edge hi-tech projects, Our Insights Team helps both innovators and our risk and accelerate the commercialisation of deep- 68 teams have been accepted for accelerator encompassing more than 450 researchers, organisation to capitalise on the future opportunities tech ideas through to commercial ventures. Given programmes since 2017, supporting 194 founders. engineers and scientists from almost 40 research created by going beyond the ubiquitous global the risks and distance to market, this programme 14 ventures have gone on to raise further capital organisations. megatrends. Through identifying key global seeks to bridge the gap to ensure that the economic ($16 million). Current providers of this service shifts and the impacts these will have, we help returns of ideas largely originating from our include Lightning Lab, Sprout, Flux and Kōkiri. Our Championing Young Innovators programme New Zealand innovators to identify innovation research institutes can be realised, and contribute seeks to encourage more young people, from opportunities with the potential for global markets, to the growth of our deep-tech sector. Through Kōkiri is a Māori business accelerator programme, primary school to university, to pursue careers in and assist them to be early movers for competitive the contracted technology incubator providers, based on kaupapa Māori values and focused on innovation. Delivered through partnerships with advantage. Through applying these insights businesses have access to up to $750,000 in capital accelerating early-stage, Māori-led start-ups with several external organisations, it helps to ensure a internally, we can help ensure Callaghan Innovation and a range of commercialisation services, including bold ambitions. Through supporting Māori-led pipeline of future talent in our innovation ecosystem. is placed to support the innovators operating in strategy development, commercialisation expertise start-ups with high-growth potential to develop their For example, the Wonder Project is delivered in these spaces. Advanced materials, advanced and business coaching, to help them make their business capabilities and wellbeing, Kōkiri aims to partnership with Engineering New Zealand to manufacturing, bio-tech, data and the Internet of ventures investment ready for their next private build a strong, connected and valuable community encourage more young people, from primary Things are some of the technology platforms we funding rounds. that is investable and enriched through Te Ao Māori, school to university, to pursue careers in innovation, focus on. and make positive economic, social, cultural and and includes several components targeted at Founder Incubators provide concentrated, core environmental impacts in Aotearoa and Te Ao. different age bands. Other current programmes and The Industry 4.0 Demonstration Network helps business support and extensive networks for Supported by Callaghan Innovation, this provides initiatives include Venture Up, Chiasma, The Social drive the uptake of Industry 4.0 technologies early-stage businesses to help them develop start-ups with access to start-up mentors, coaches, Experiment and the Pūhoro STEM Academy. amongst New Zealand manufacturers, with the and accelerate their paths to market. Incubators investor networks and a $10,000 start-up grant. aim of increasing their productivity and global provide services to help businesses validate competitiveness. Through directly demonstrating ideas in the market and build strong businesses The New Zealand Food Innovation Network Connect the ecosystem the improvements and value that the use of robotics, around the ideas. This includes assistance with (NZFIN) is a national network of processing plants, automation, data analytics and AI can bring, the technology and market validation, business supporting firms to develop their food and beverage Scale-Up NZ is a free online platform that makes Network seeks to encourage businesses to adopt planning and development, capability building products. The primary focus is on delivering it faster and easier for ambitious businesses to find and use these technologies to realise productivity and governance. Founder Incubators focus on support through four regionally based food hubs – and connect with the people, capital and other gains. It comprises a mobile showcase, a network building entrepreneurial capabilities among FoodPilot (Palmerston North), FoodBowl (Auckland), help they need to innovate and grow, here and of site visits and smart factory tours, with up to high-growth start-up teams that leverage less FoodSouth (Lincoln) and FoodWaikato (Waikato). offshore. It also creates opportunities for investors, two factories demonstrating deeper Industry 4.0 complex technologies and need to move fast to Intended to improve the industry’s international incubators, multinationals and other collaborators engagement. capture market share. 371 founder teams have been competitiveness, NZFIN removes access barriers to connect with innovative New Zealand supported through Founder Incubators since 2017, for firms by reducing the costs and risks of food businesses, helping to support and develop our AddLab helps inspire and enable businesses and 218 ventures have gone on to raise additional and beverage development and innovation. NZFIN ecosystem. Through the platform we also provide to explore the opportunities that additive capital through the markets ($253 million). Current achieves this by providing firms with open access up-to-date information and insights on a range of manufacturing (3D printing) provides for their providers of this service include ThincLab, The to expert knowledge, equipment and connections active innovative companies, and facilitate first development processes. Connecting manufacturing Icehouse, Soda Inc, Creative HQ and The Factory. across the spectrum of commercial scale-up, introductions between interested parties. businesses with emerging technologies allows helping them to develop products from prototype for the limitations of existing techniques to be through early-product and market validation. overcome, leading to new complex products in a time-efficient manner.

Appendices 27 Appendix One: What we deliver to support the innovation ecosystem (continued)

The Regional Business Partner Network provides Callaghan Innovation develops and maintains Callaghan Innovation also administers several R&D Capability support connections to advice and services to enable strategic international partnerships to ensure that grants to provide direct and targeted financial New Zealand businesses to grow their capabilities. New Zealand is at the forefront of innovation best support to businesses that complement the broad- Our Research and Technical Services group Jointly administered with New Zealand Trade practice. These relationships create access to new based RDTI mechanism. helps businesses to innovate and commercialise and Enterprise, this nationwide network provides ideas, access to markets and talent, investment through support for design, product development, businesses with localised access to information, opportunities and collaboration opportunities. • Project Grants are targeted at businesses that prototyping and R&D. Employing more than 130 of training and development services and funding. Our relationships bring value to our customers, are new to R&D. With a 40 percent co-funding New Zealand’s leading scientists, engineers and our organisation and the broader New Zealand rate, these provide a significant boost for technicians across three cities, the group offers Regional Business Partner Growth Advisors act innovation ecosystem. Key relationships include businesses that are at an early stage of their R&D expertise and associated infrastructure to a wide as account managers, assessing businesses and those with Australia, Israel, the United Kingdom, journeys. Since the scheme was launched in 2013, range of companies, from start-ups to some of working with them on their needs and growth Ireland and Singapore. we have supplied more than 2,300 Project Grants New Zealand’s largest businesses, to solve the opportunities. The network is a key channel to to help businesses get their R&D programmes off tough technical challenges they are facing. This customers for Callaghan Innovation, and helps International delegations (incoming and outgoing) the ground. group is organised across four key technology administer more than 50 percent of our grants. form a significant part of our international platforms: advanced manufacturing; advanced relationship activity. Recent examples include: • Student Grants provide funding to businesses materials; bio-tech; and the Internet of Things and We facilitate clusters of Māori businesses with a a delegation of New Zealand agri-tech innovators to subsidise the cost of student summer interns Data Solutions. desire to innovate or create shared opportunities. attending evokeAG, Asia Pacific’s largest agri-food (Experience Grants), PhD or Masters students These collaborative projects help build connections, -tech event; Vic Crone leading a delegation of (Fellowship Grants) or the first six months’ Callaghan Innovation owns two businesses that reduce the costs of R&D and promote the sharing Crown Research Institute chief executives to San salary costs for recent graduates hired by the generate commercial revenue and contribute to of knowledge among the partnering businesses. Francisco to learn from best-practice examples businesses (Career Grants). These schemes New Zealand’s innovation capability in Current clusters include: in R&D and commercialisation; and a Japanese provide a strong incentive for businesses to specialist areas: business delegation visiting the Gracefield bring in new talent from the tertiary sector, • Nuku ki te Puku – a collective of organisations both creating opportunities for students and • GlycoSyn is a world leader in the development focused on developing high-value nutrition Innovation Quarter to learn about our vibrant and manufacture of active pharmaceutical innovation sector to foster economic links under supporting the innovation and R&D skills business in Asian markets. The collective has pipeline. This scheme has helped more than ingredients for pre-clinical and clinical trials. supported a wide array of Māori iwi, land trusts the Comprehensive and Progressive Agreement With significant expertise in and infrastructure for Trans-Pacific Partnership. Given the current 1,600 students to receive placements in industry and incorporations to invest in global R&D and in the past four years alone. for carbohydrate and complex chemistry, innovation that is supporting the creation of high- COVID-19 travel restrictions, Callaghan Innovation is it provides fee-for-service pharmaceutical value jobs exploring virtual engagement options to ensure that • Getting Started Grants are available for development contracts to domestic and our international connectivity continues. businesses at the beginning of their innovation international businesses, in addition to • Hemp Collective – a diverse group of journeys. Delivered through the Regional Business manufacturing its own patent-protected government, Māori and research partners who Partner Network, they provide up to $5,000 for a products for international supply. GlycoSyn is have helped to develop the potential of hemp, a Empower innovators broad range of early-stage innovation activities, also a potential part of New Zealand’s vaccine new legal commercial industry. This has resulted including basic prototyping, technical feasibility production capability for COVID-19. R&D funding in the development of an industry capability studies, and the development of Intellectual roadmap to help newcomers locate capability Callaghan Innovation delivers several funding Property strategies. • KiwiStar Optics is a global leader in precision and entry points to the industry programmes to incentivise businesses to invest optics for astronomy, directly contributing in R&D and support them to grow the size of their A time-limited R&D Loan Scheme was launched in capability to New Zealand’s space technology • Natural Products Collective – a collective of R&D programmes. The largest of these is the R&D May to assist R&D-performing businesses to survive sector. It is specialist optics design and 110 natural product companies that collaborate, Tax Incentive (RDTI), a 15 percent tax credit on and recover from COVID-19. Recognising the high manufacturing company, customising solutions share ideas and resources, and identify where R&D expenditure, which is jointly administered by costs associated with R&D programmes and the role for the astronomy, instrumentation and space government initiatives can support their growth Callaghan Innovation and Inland Revenue. Callaghan R&D will play in New Zealand’s economic future, the markets both domestically and abroad. aspirations. The Collective has now formed its Innovation’s role is to assess whether the businesses’ scheme allows eligible businesses to borrow up to own governing body and a legal entity to manage activities meet the definition of R&D under the RDTI $400,000 under favourable lending conditions. This the collective going forward legislation, and thus qualify for the RDTI. While scheme is a short-term measure, and applications the RDTI is delivered through the tax system, the will close on 31 March 2021. As at 17 September Minister of RSI is the Minister responsible for the 2020, $74.6 million of loans had already been relevant appropriations and policy settings. provided to 211 businesses, enabling them to continue their R&D activity.

Appendices 28 Appendix One: What we deliver to support the innovation ecosystem (continued)

The Measurement Standards Laboratory (MSL) Our Sectors teams partner, either directly or The Product Accelerator undertakes research is New Zealand’s national metrology institute, indirectly through the Regional Business Partner for innovative manufacturing companies to enable providing services that are a key enabler for Network, with ambitious companies and unique them to compete in and grow their markets. technology development and the international Māori entities to help them achieve success through By connecting industry with research expertise, competitiveness of New Zealand businesses. commercialisation and innovation. Our business the Accelerator helps to solve industry problems, MSL is responsible for maintaining the national innovation advisors and customer managers use build productivity and support the transformation measurement system essential for international their deep sector knowledge and networks to of the economy through diversification and and domestic trade, and the efficient function provide advice and connect customers with the improving its knowledge intensity. This is achieved of electricity markets, safe aviation, high-value capability, capital, business support and training through a process of direct engagement with manufacturing and law enforcement; the 175 they need to progress their enterprises. Our current companies, defining new opportunities through internationally recognised measurement standards focus sectors are Digital, Health, Food & Beverage, R&D, connecting with the right research expertise, it provides enable New Zealand exports to be Agri-tech, Manufacturing, Energy & Environment, and delivering the resulting projects. accepted in more than 100 markets. MSL is also Transport & Logistics, Māori Economy and a key component of New Zealand’s standards Start-Ups. The Bioresource Processing Alliance seeks to and conformance system, which is calculated to increase the volume of high-value materials derived contribute $2.4 billion in premiums to New Zealand Our Innovation Skills programmes help businesses from secondary bioprocessing streams through exports and 0.6 percent to GDP. build their innovation capability by helping them smart science and technology. Working with acquire the knowledge, skills and motivation to industry partners, it helps to convert low-value The Māori data pilot, Pātaka Raraunga, is a free innovate and succeed. The range of programmes primary industry and other biological waste streams website to drive Māori R&D data and Māori helps build capability in different areas: Lean helps into high-value export goods, reducing waste economy data to the forefront. While data is widely achieve better productivity through engaging staff; and increasing New Zealand’s exports in general. recognised as one of the most valuable assets of Build for Speed helps deliver better software, faster; The Alliance provides a portal for companies to the modern world, many who work with Māori, or Driving Innovation helps develop better products the combined world-class science capabilities who serve Māori communities and whānau, have and services, faster; Innovation IP helps identify and technical facilities of four of New Zealand’s limited access to reliable data for and about Māori. and strategically manage intellectual property; and national research providers: AgResearch, Callaghan Delivered through a partnership with Figure.NZ, Capital Education helps start-ups understand the Innovation, Plant & Food Research and Scion. more than 1,800 charts and over 60 tables of reliable capital-raising process and how to raise the capital Māori data have now been published, an important they need to create thriving businesses. The Gracefield Innovation Quarter (GIQ) gives first step in teaching people how to use data in ways businesses access to our best scientific and that can help them make better decisions. The HealthTech Activator is a coordinated, technical expertise, advice, services and specialist ecosystem-wide support mechanism for early- facilities through their co-location in a single site. stage founders and companies in New Zealand’s It includes access to Victoria University of health-tech sector. The Activator makes it easy Wellington’s Ferrier Research Institute and Robinson for health-tech companies to find and access the Research Institute, which are also located at GIQ. support they need to turn their health innovations This ready access to expertise helps businesses into successful businesses, and de-risks and to fast-track product development, scale-up, accelerates the commercialisation of innovation in deployment and testing, accelerating their our health-tech ecosystem. R&D journeys.

Appendices 29 Appendix Two: How we are strengthening our critical foundations

We have several key transformation programmes • Our significant customer experience work, the Our vision for the Gracefield Innovation Quarter Te Ātiawa and Ngāti Toa are in discussions now on and initiatives in place to improve our ability to CX project, has helped us understand the needs (GIQ) is a vibrant, supportive and connected the partnership of a Māori-designed cube satellite serve the ecosystem and to care for the wellbeing of innovators, and we are now testing processes innovation community, but the site is currently in of our staff. and products that will result in an improved poor condition due to decades of underinvestment. As we are now looking at the future development and more efficient distribution of our services. In May 2019 the Government invested over of our site, the local iwi are key partners in those Our Digital Transformation Programme will Through studying those doing R&D or innovation $110 million to address many issues demanding discussions improve the productivity and quality of our services towards commercial benefits, we have mapped immediate attention, including structural upgrades We have established an Enterprise Project both now and in the future. The move to Google the journey of innovators through New Zealand’s to buildings, asbestos contamination and deferred Workspace and the redevelopment of both our Management Office to ensure the strategic innovation ecosystem, from initial idea to maintenance; this work is due to be completed alignment and successful delivery of programmes funding platform and our website will improve our ultimate success; this has helped to understand by 2023 and builds the foundation for future collaboration and productivity, while the increased and projects. Through providing guidance, their needs, who was best placed to deliver development. To define this future state, we governance and tools, the office assists the automation in our systems will allow us to redeploy them, and where there were gaps in support. are running a strategic programme of work in our people for more impact. These systems are deployment of multi-disciplinary and agile teams, Applying these learnings internally has allowed collaboration with partners to deliver world-class ensures projects are aligned with our strategic also being built to adapt to future demand, and will us to triage and tailor our responses to customers, facilities and an innovation community at GIQ allow us to incorporate machine learning, business objectives, and contributes to our projects being fit allowing for a more efficient distribution of our that will support businesses to commercialise and for purpose to assist benefits to be realised. process intelligence and AI for further gains. As resources for maximum impact, and to move to undertake R&D effectively in New Zealand. the customer has been placed at the heart of this address gaps for frontier firms with the greatest Our Leadership Development programme helps process, this will also deliver improved ease of potential. We are prototyping this approach We are seeking to build our Māori capabilities to improve our leadership capability at each level access to our services and increased transparency with our HealthTech customers, and we expect within the organisation towards being a better of the organisation. Based on a leadership skills in our processes. this to be an area of continual learning for the Treaty partner. In addition to our dedicated Māori gap analysis completed in 2019, it is helping to economy team, we host a two-day Kia Māia Marae The Tātai Whetū programme is dedicated to organisation. build the skills required by our leaders to lead an experience designed to help our staff learn more agile workforce and ensure a high duty of care improving the way we operate, with a specific focus • The Research and Technical Services Strategy about Māori business, culture, history, language on the development of our culture and processes. for our employees. The three components of this seeks to improve the impacts of our research and and people, and how it can lift the New Zealand programme are: training in crucial conversations; Through this comprehensive and transformational technical services on New Zealand businesses economy and differentiate us on the world’s stage. programme we are seeking to both increase our promoting mental health at work; and a coaching while operating within a viable financial model. We also operate a cultural app for our staff, Te programme based on self-reflective practice. impact on the innovation ecosystem and be a This has involved identifying our ideal target Pou Herenga, to help with delivering mihi and the world-class government agency that is an exemplar customers – the high-impact innovators with the pronunciation of te reo. Our Wellbeing Strategy, based on the te whare of innovation for others to follow. Current focus greatest potential to contribute to New Zealand’s tapa whā model of hauora, guides a holistic areas within this include: process optimisation and economy – assessing their needs, and identifying We have also developed relationships with the approach to ensuring the health and wellbeing reviewing our operating model; implementing our ways to increase support for this group, while local iwi Te Ātiawa and Ngāti Toa around our of our people and organisation. The strategy change framework, He rangi hou kei tua, to assist ensuring sufficient commercial revenue is Waiwhetū (Gracefield) site. This has resulted in focuses action on three pillars of: education – the us in being a more agile organisation; refining the generated for sustainable operations within the several joint research projects including: opportunities for our staff to upskill and continue vision for the organisation and what we are here for; current funding envelope. Additional components lifelong learning; environment – our systems and extensive customer experience (CX) work as • A new vaccine project, where funds are being of the strategy include developing an R&D sought to support education on vaccines to the and processes are designed with consideration part of the CX project to help us better understand sharing platform and ‘moonshot lighthouse’ of impacts on wellbeing; and community and and be able to serve our customers. The programme local community, delivered through Te Ātiawa’s centres in areas of national significance. medical centre, and plans to run workshops with engagement – the wellbeing offerings that are will also embed the principles of Māoritanga in the available and promoted to our staff. ways we work, shaping Callaghan Innovation as an local youth in this science discipline exemplary Treaty partner. • The use of seaweed feed to lower cow methane emissions, where local rangatahi will be involved in the collection, identification, extraction and processing of seaweed collected from Wellington Harbour

Appendices 30 Contact us Our locations Phone Asteron Centre Tāmaki Makaurau, Auckland Within NZ 0800 422 552 Level 14, 55 Featherston Street, Pipitea Ground Floor, 1 Watt Street From overseas +64 4 931 3578 Wellington 6011 Parnell, Auckland 1052

Email Wellington PO Box 2225, Shortland Street [email protected] Gracefield Innovation Quarter Auckland 1140 Let us know your location when you email so we 69 Gracefield Road, Gracefield can put you in touch with the right people. Lower Hutt 5010 Sheffield Crescent, Christchurch 5 Sheffield Crescent, Burnside PO Box 31310, Lower Hutt 5040 Website Christchurch 8053 callaghaninnovation.govt.nz PO Box 20028, Bishopdale Christchurch 8543

facebook.com/callaghannz/ twitter.com/callaghannz linkedin.com/company/callaghan-innovation We look forward to working with you to achieve your objectives and drive towards a better future for New Zealand.

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